5 Things to Consider Before Selling (Or Merging) Your Urgent Care Center

Updated on November 11, 2018

By Luis de la Prida

Here’s a hot trend we’re seeing: More and more urgent care centers are being approached by hospitals to see if they’re interested in selling or merging. That’s because when a hospital acquires an urgent care center, it’s a great way for the hospital to bring in additional revenue and manage costs.

But as it turns out, not every urgent care center is ready to handle the call.

Before you start the conversation, take some time to think about your options. This is a big decision. You want to make sure you’re getting the best deal possible. And to do that, you’ve got to prepare. Here’s how to do just that:

Know what you’re selling

As soon as your urgent care center is for sale, buyers will want to know what you’re all about. You need to thoroughly understand the ins-and-outs of your business — and also, give some serious thought to your end goals. Knowing what you want at the beginning can help you formulate a plan to get there at the end.

Dig deep to understand your profitability, practice profile and staff continuity. It’s your job to understand the health of your business. You might also want to ask yourself the following questions:

  • Do you want to be part of a hospital system?
  • Do you see your practice as part of a large group?
  • Do you want to retire outright?
  • How long are you willing to continue practicing medicine?

Pretend like you’re doing an internal audit. That way, when it’s time to negotiate a sale — you don’t have to wait until somebody from the other side of the table tells you what you’re worth — you’ll already know.

Time for paperwork

Now is the time to tidy up all your documentation. Keep track and understand the key elements of your financial, legal and operational systems. Year-to-date financial statements, tax returns for the past three years, detailed billing, collections and payroll reports are a good place to start.

In addition, spend a couple of hours familiarizing yourself with the legal documents of your practice, such as: articles of Incorporation, shareholder agreements, employee benefits, facilities, claims, litigation, risk management, assets, financing documents and other contracts. You’ll also want to look at how much is being paid (salaries and fringe benefits) to practice owners (and their immediate family members).

Good news: You don’t need detailed knowledge of everything in these documents (that’s what your CFO is for). At this point, you just need a high-level view of what’s inside them.

Know your inventory

After you’ve got your documents lined up, don’t forget to take an inventory of the major items owned by your urgent care practice, such as your office furniture and fixtures, medical equipment (such as X-ray machines), computers and medical inventory.

Once you’ve got your assets accounted for, consider completing a formal valuation of your center or get a Broker Opinion of Value.

This step is going to give you a good idea of how much your practice is worth.

It’s OK to get help

If you wind up selling your practice, you’ll want to assemble a transition team. This includes: your accountant, attorney, financial advisors and healthcare mergers and acquisitions professionals. Here’s a little more about what each role will play:

  • Your accountant will help you with financial due diligence, along with keeping tabs on the tax calendar.
  • Your attorney will help you with all kinds of legal paperwork.
  • Your financial advisor will help you with AFTER TAX ROR.
  • Healthcare M+A professionals will guide you on the right steps your practice should take.

You want this team to help you make the best, most informed decisions. Know each person’s strengths and weaknesses. Don’t be afraid to use your own network to recruit more people for your team, if you feel like you need more support.

An M&A has potential to be a big, messy complicated transaction. That’s why you need people on your side to help you through the process.

Focus on improvement

Even though you’ve done the above steps, an M+A doesn’t happen overnight. You’ve got time to think about how to improve the fundamentals of your practice. Ideally, you’ll want to present the buyer a detailed marketing plan that addresses the unique benefits and challenges offered by your practice.

There’s a tendency to slow down after you reach the decision to sell. But now is not the time to take it easy. In fact, you need to ramp up your commitment. Throughout this process, stay motivated on running your practice to the best of your abilities — especially with regards to patient care and employee relations. By staying focused and building a strong plan, you will increase the likelihood that multiple buyers will compete to be the right to partner with you.

Luis de la Prida is a Managing Director at VERTESS, where he helps clients successfully navigate the complexities of acquiring or selling a business, exit planning, and business valuation.  Throughout his diverse career, Luis has served as the Chief Operating Officer of a multi-specialty medical practice and gained valuable international experience in financial roles at JP Morgan and Credit Suisse First Boston.

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